subject: Hard Money Lending Uncovered By Jalem Grome [print this page] If someone would have had the credit conversation with me when I was graduating from high school then my life probably would have taken a different path. A good credit score is probably more important than your social security number. For some strange reason not having a social security number will not stop you from getting a new car, but a 550 FICO score would get you tossed off the car lot.
Your FICO score isimportant if youre trying to buy a new car, but youre trying to buy a house then you have an even harder uphill climb. About the time I had resurrected my credit score out of the 500s into the promised land of the 680s, the credit Gods set the new FICO mark to 720. Trying to get a 700 FICO score can be a very elusive task being that it is not really clear how to accomplish this magic number.
So now I find myself in the world of real estate investing and to no surprise my 680 credit score is still not enough to get a deal done without a ton of money down. During the course of researching potential lenders I came across a term I had never heard of before, Hard Money Lender. At first I thought the mere fact that the word Hard was in the title probably means it would be totally impossible to obtain, but to my surprise this turned out to be one of the greatest oxy morons ever.
The term Hard Money only refers to the criteria the lenders uses in deciding the viability of the deal. In other words the Hard Money aspect is tied into the actual collateral or equity position of the deal. According to Wiki A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Here is the best part about the world of Hard Money Lending; the approval of your loan is not determined by the credit score. This was great news for me being that everything ever tried to purchase was contingent upon my credit score.
Just to confirm the accuracy of the information I was reading I decided to call several Hard Money Lenders and to my amazement not one of them asked me to fill out a credit report. With my new secret weapon in place I then set out conquer the real estate world, however many of the lenders still required you to have whats known in their industry as Skin in the game.
Skin in the game refers to having some of your own money invested in the investment property that youre interested in purchasing. This too can also become a major hindrance to many people who are interested in purchasing investment properties, but if you are blessed enough to have the 20% investment to go alone with the requested loan amount, then you are on your way to flipping for cash.
Unfortunately for me I didnt have 20% in my night stand drawer therefore I had to come up with another way to fund my deals.
What added to my frustration was all of the late night infomercials on real estate wealth which attempted to make this process seem effortless but this proved to be very far from the truth. At this point I actually came full circle and arrived back at the door step of Hard Money Lenders. With a little more research I was able to find a Hard Money Lender willing to fund 100% of my deal if I came in under 70% LTV, and had a credit score of at least 660.
Hard Money Lenders are not like banks, many of the Hard Money Lenders are comprised of private investors. The benefit of dealing with private investors is that the only thing that matters is the profit potential of the deal. This is reason they can overlook your credit because the actual property that you are rehabbing is used as the collateral in order to secure the deal.
http://www,yeswecanloan.com
by: Tyronne Jacques
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